Retirement may be the furthest thing on the minds of most people in their 30s. However, financial experts say this is exactly the time to start to get serious about planning for retirement. Here are three things that “30-somethings” should be doing to prepare for retirement.
1. Start Small
The great thing about learning how to prepare for retirement early is that you have a long time for “little acorns” to grow to “mighty oaks.” Make small contributions and investments in retirement accounts early on. This allows you to increase your portfolio substantially simply by allowing the “magic” of compound interest to do its thing. Prioritizing retirement as early as possible -even by starting small. This will ensure that you have a solid base of contributions that will continue to grow if invested appropriately.
2. Make Bigger Contributions as Careers Take Off and Expenses are Low
If you are a parent, you know that once you have kids, expenses skyrocket. Saving for anything, let alone retirement, becomes problematical. Since many people in their 30s are “dinks” – “Double Incomes No Kids” – it is the perfect time to really lean into retirement savings. By contributing substantially to retirement early, while you have relatively more budget flexibility, you give yourself the flexibility to save less later when your expenses are greater, like when kids come into the picture. You are essentially buying yourself options by leaning heavily into your retirement savings as soon as you can.
3. Try to Balance Paying Off Debt With Retirement Investing
A common mistake that people in their 30s make is putting off retirement investing until they have paid off debts. The desire to pay off debt is commendable, and of course is a cornerstone of good money management. However, paying down debt and saving for retirement do not have to be mutually exclusive. You should try to balance the two as nearly equal priorities – especially in your 30s.
By following these tips now, you are allowing time and compound interest to do most of the heavy lifting to achieve your goal of a secure and abundant retirement on your terms.